ET Now: Do you think the credit policy has turned out to be a no event for the Indian markets? We discussed a lot about the credit policy, but nothing honestly came out from the credit policy.

Prashasta Seth: The number the governor gave was exactly in line with market estimates. So, obviously it was already factored into the prices and that is the reason you did not see much reaction on that. If it would have been something which was unexpected, like a 50 bps cut, that would have been a big positive for the market. But as long as things remain as per market expectations, you are unlikely to see any big movement in the stocks.

ET Now: So what then really spook the markets because after the credit policy, the Bank Nifty, Nifty-50, Sensex and rate sensitivities rallied. Till about 1 o'clock things were holding on. The problem only started in the second half.

Prashasta Seth: I do not know what exactly triggered the fall in the second half, but 6100 seems to be something which is a big resistance for the market and what has happened is 6100 was taken out and it could not sustain 6100 and the markets came down. Below 6100 some amount of technical selling might have happened. People might have become nervous, but beyond that I do not know what really spooked the market in the last half an hour or so.

ET Now: What are your thoughts on Axis Bank?

Prashasta Seth: I am fairly constructive on Axis. There is a big dichotomy between what the market expects from Axis and what Axis has been delivering. In terms of market expectations, people fear that it has a huge exposure to infra and you will have a large amount of NPAs coming up, the gross NPAs of the bank are going to rise substantially. But till now nothing of that sort has happened. The bank has been able to grow, the bank has been able to contain bad assets. So there is a big dichotomy what the market is pricing in in the stock and what the company is actually delivering. So my sense is either this stock will touch 1800 in the next one year or it will go down to Rs 1000, depending on what situation plays out. So we feel that the market is much more concerned than what it should be in terms of NPAs. So we are fairly constructive on this stock and believe that it could be a big outperformer over the next 12 to 24 months.

ET Now: The watch for at least two weeks ago was real estate, but in the last two weeks real estates stocks have not gone anywhere. In fact stocks like DB Realty or for that matter Anant Raj Industries and Parsavnath have disappointed. Are you hot on that group? Are you hot on that space?

Prashasta Seth: I am totally avoiding it actually, to be frank. I do not see sales picking up for the companies and unless that picks up and the prices come down, I do not see any of the companies being able to increase their sales drastically from where they are at this point of time and till that happens, I do not think these stocks will do well. People are arguing that EMI cut will lead people to put more money into real estate and buy houses, but my sense is yes EMI is important, but at the end of the day, people look at the absolute amount also that they are paying. At the end, for most of the people the properties still are far out of reach in terms of the overall requirements. So I do not see sales improving in the next 6-9-12 months and till I see that I would definitely avoid this sector totally.

ET Now: At a time when in general the market opinion is to avoid staples and stay away from some of the consumer names, ITC is outperforming the Indian markets. In a quick time, it has moved from the levels of 290 to about 303-304.

Prashasta Seth: It is the question of choice. With Lever disappointing, you are left with very-very little option if you want to an exposure to consumer staples as a category and that is the reason I see you are seeing a continued outperformance by ITC. My sense is it depends on your market view. If you are not that bullish on the market, I still believe that even though consumer staples are expensive and you might not want to be overweight as a category, but you definitely have to be on equal weight into the category and then you don't have any choice except ITC at this level. Next six months will be tricky for ITC because with the budget coming in, people will become nervous on essentially how, what the treatment comes with respect to excise duty for cigarette. So the next one month could be slightly tricky, but if you are of a slightly medium-term view with the kind of earnings momentum and the sustained 20% earnings that ITC is showing, it has to be part of your portfolio.

ET Now: What is your big call for 2013? Which is one stock where you will allocate more than 6-7% of your total portfolio?

Prashasta Seth: If you ask me in terms of overall portfolio, your more than 6% would be ITC, ICICI Bank, Axis Bank, and HDFC Bank. So those will be among some of the top names in the large cap space. On the midcap side, there are two names that we are looking very-very closely, which are Bajaj Finance and Karur Vysya Bank. If you are looking for companies which can grow 20-25% without any stress, irrespective of the environment and where the valuations are not that expensive, then these two names would be on top of that list.